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tv   [untitled]    November 18, 2011 1:00am-1:30am PST

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unfortunately, is of broad and cannot attend this meeting. i will give a rather cursory review of this. anyway, this report looks at two recommendations contained in the report, "pensions beyond our ability to pay" issued by the civil grand jury. the first finding dealt with the practice of pension spiking. spiking is defined as instances when an employer's final compensation is increased before retiring, causing the increase in pension amount. in the prior report, the civil grand jury defines this as a salary increase of 10% or greater in one of the last three years before retirement. based on pension records supplied by the police and fire departments, the jury found evidence of an increase of over
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10% salary during the last three years of service in 10 out of 47 fire department employees, or 21%. the corresponding figure for the police department was 10%. the mayor's office, fire department, and police departments all denied this practice occurred. i can suggest that the members of this committee examine the examples contained in our report and draw their own conclusions. the report also recommends that the salary increases during the three years before retirement that exceed estimates currently at 4.5% be reviewed by the comptroller's office and the employee retirement system. for its part, the employee retirement system says it is un necessary, as it is already taking salary increases from the
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last working year into account. currently, 9%. and in determining the liability associated with these increases. my only remark is -- one might ask whether the difference between 4.5% and 9% is an oblique way of admitting spiking is occurring. the second and last recommendation deals with the city's $4.63 billion health care plan unfunded liability. the report points out that even under proposition c, it will only apply to new employees with existing employees not required to make contributions until 2016-2017. the jury recommends that the
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mayor and the board of supervisors' budget and finance committee should develop a temporary remedy. until their retirees' health trust funds can cover the expense, thereby avoiding the negative impact on funding levels for other city programs. finally, just a few words on the third issue, which is -- in a 2008, 2009 report, it was recommended that they should work together to ensure that the go box's annual report is presented at a hearing annually. and that disappearance should occur within one month of the
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publishing of the annual report. at the request -- the comptroller's office is currently discussing with the board of supervisors and mechanisms for arranging presentations to the board of supervisors of the annual reports. i do not know how much i went over. supervisor campos: thank you very much, mr. flanagan. colleagues, any questions for the civil grand jury? ok. thank you very much for your work. again, to you and to all the members of your committee who worked on these items. now, why don't we hear from the staff? if we can hear from the head of the department of human resources. >> thank you, supervisors. what i would like to do is comment on a couple of the recommendations as to the
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pension issues that were raised. first, and this is basically reiterating the responses we previously made, although with the passage of prop c. first of all, as noted by the presenter from the civil grand jury, i would not concede -- spiking is kind of a euphemism. it is true in police and fire that people earn more in the final years of employment. that's because those of the people whom we promote. we promote othem because they ae experienced people. i'm not sure what the civil grand jury had in mind as to how we would manage that. the salary increases that people are receiving hand that i have
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reviewed in the civil grand jury materials have to do with the fact that they are moving to a higher rate of pay. we are filling a position. those individuals are getting a higher rate of pay with those positions. however, several years ago, the board moved with a charter amendment to single -- the last two final years, averaging the final compensation. with the passage of prop c, it's the final three-year passage. to the extent there is spiking or what ever you want to call it, it will be less prevalent. mayor did or not, individuals final contributions determine their tension. that has been addressed. i think three years is the standard people are moving to statewide.
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the other issue was the retiree health-care contributions. i just noted this morning that the number of people, or the percentage of city employees on whom's behalf contributions are currently being made by them -- that is, employees hired since january of 2009. we have something like a 5% turnover per year. if you were to sequester out those individuals and their retiree health-care obligations, you would see that the normal cost for them -- they are fully funded. the fact is that people like me, who were here before january of 2009 are not contributing. on the advice of the city attorney, we moved to look at begin negotiating contributions. that continues to be an interest of this city. in prop c, have done several
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things to fund our liability to health-care obligations. there will be a quarter percent per year required of employees and matched by the city for active employees. that is all in prop c. in addition, we're hopeful some of the changes in prop c as to what we provide in retiree benefits, will likely reduce our costs going forward, as well. also, start attacking the unfunded liability. for example, under prop c, people who left the city before the improvement of the pending
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health care coverage availability -- people left the city but when on to other careers will not be receiving the benefit which was improved after they left. there is a fairly significant savings associated with that. i do not believe that contemplated by the civil grand jury. we have a fairly controversial change in the structure of the health service board, which we think will yield savings. it's very hard to say how much. by having more balanced decision making bodies on the board, we think the city's interest as to making weiss financial decisions in its purchase of health benefits will also show long- term benefits to us. i think that the big challenge that we all face and most public agencies in california who have
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retiree health benefits are not finding them at the levels that would retire the obligation within 30 years. that continues to be the case for san francisco. in 2007-2008, when we passed the first prop b, we determined we probably would need to set aside 15% of salary per year. that is something we are not doing. i can see the comptroontroller s here. supervisor campos: thank you. any questions? a lot of things have been addressed in prop c. thank you, again. >> thank you. supervisor campos: we can now hear from our controller.
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>> good morning, supervisors. elaborating on a number of the comments on pension and other post employment benefits. i just wanted to add, from my perspective, it's important to acknowledge that challengers remain as the city works towards addressing longer-term retiree health care liabilities. an estimated current liability of $4.3 million over time. that's a snapshot moments in time given the payroll on that day that liability will grow year over year as wages escalate. to give a sense of what that
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increase will look like, absent any change during the last four years, the $4.3 billion would have otherwise grown to $14 billion in 30 years, as we jayws inflate. proposition b significantly reduced the rate of growth. given the changes, that $14 billion in projected liability is now projected to grow to approximately $8 billion. approximately $6 billion in projected liability reduced as a result of that ballot measure, but a significant gap will remain. prop c takes steps in the right direction of moving to pre- funded model home. it's a model that would reduce
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city cost over time. the steps taken in prop c r first steps and will require for the first time for those of us hired by the city before prob b had taken place, that the contribution from the employee's and the employer will likely need to be hired to meet and fully pre-fund the plan. to shift today to a fully pre funded retiree health system would require us to set aside about 15% of payroll. a very significant change. employers generally treat these issues over many years. that is a significant shift. we've provided recommendations to the mayor and the board. many of which have been partially implemented. we will continue to provide advices. supervisor campos: supervisor thank you. colleagues, any questions? before i call for the mta, i
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want to say that i think it's important with knowledge of the very important role that the civil grand jury played in highlighting the importance of dealing with the pension issue. a lot has been said about the work that a number of elected officials have done, whether it is supervisor -- or the public defender, but the civil grand jury did play an important role in highlighting this issue. i think the city is indebted to them for bringing this to their attention. now we can hear from the mta. >> good morning, supervisors. we also want to thank the civil grand jury. we verreally believed the
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disabled placard frauneeds to be better addressed. the mta's evaluations program has evolved over the years as we learn more about our parking. initially, mta had agreed with the civil grand jury that an independent review panel was necessary. having done our best practices study and our outreach, we believe that the independent review panel is not only administratively burnham some, but we also believe talking to the disabled community that they do not want to have another step for the have to come and demonstrate their disability. what we are recommending, the solution, is double prong. the first thing we think we need to do is understand -- if all the cities in california are asked to implement parking practices in the same way, for example, l.a., san francisco,
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and oakland have very different issues than vallejo and fresno. the first recommendation is to change the state legislation to allow individual cities and councils to pursue local solutions to the problem. that will be one of the efforts during the legislative session this year. the second thing we want to do -- once we get that in place, we really believe the most effective way to address disabled placard fraud is to eliminate the financial incentive. that's the root of the problem. we found out recently that overall in our city, about 20% to 60% of parking spaces can be taken up by disabled placards, depending on the area, and there are over 600,000 disabled
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placards. it's a lot of people coming from outside the city who live, work, play, who are using up our parking spaces with these disabled placards. supervisor campos: quick question for you. are disabled placard -- there's obviously an issue about if they're used appropriately. do they cost money to obtain? do they pay a residential parking price? >> there's no money to get a disabled placard. dmv manages it. you would provide the physician certificate and they're automatically renewed by mail. there's no local involvement at all in the distribution or management of disabled placard. talking to the other cities --
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for example, of philadelphia. right before the financial incentive was implemented, 30% to 40% of the parking spaces were filled with disabled placards. the week after, it dropped to 3%. we believe the most effective way is to eliminate the financial incentive and required disabled drivers to pay for parking. take that money and move it to the transit system. we believe that would be one way to address this. the other thing we recognize, there are lots of economically disadvantaged disabled drivers. we are currently working on
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that. our initial thought, they would get a 50% discount. supervisor campos: can i ask you a quick question? if this is governed by state law, how are you going to implement not only parking fees, but then half of fees? >> you are right. the state law has to be changed. we are working on finding responses. if we get that passed, we can have a discussion at the local level as to exactly what we want san francisco to do. l.a., berkeley, oakland, the major cities in california are willing to partner with us, and various other stakeholders to get the state legislative
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change. once that done, l.a. can fashion a program the way they want to and we can fashion a program the way that makes sense for us. you are right, supervisor. the first step is to have the change, flexibility of language in the code. hopefully the supervisors will help us get that change into the state code. supervisor campos: ok. just to clarify how you are thinking about this now, are you proposing, if it came to installing parking meters, or you are saying there's a local feed to quali to qualify? >> if this passes, we would recommend doubling the number of blousoue zones. in those zones, we would put
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some sort of payment mechanism. you would pull into the spot. you would be required to pay for the spot, like a meter, just like every other driver, but you would have a spot in the front of the building. if you are a low-income person, you can pull up to the same spot and we would give you some parking card or some kind of discount to put into the meter. this is really about accessibility. once you are at the blue zone, you would be asked to paid like every other able bodied person. >supervisor campos: are they related? >> we believe that if you make people pay for the restores,
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they will not go and get a false disabled placard. right now, they are getting free parking. there would be no advantage to getting the placard. the other hand, we've heard terrible stories about these real disabled people who cannot get access to the blue zones. by giving more access to the truly disabled, we believe that will help. they will be asked to pay, as well. supervisor campos: i guess this will come at a later date. some real questions. hearing this for the first time. access is correct. we should be supporting our disabled community in many ways.
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requiring to pay at point of sale -- has this really been thought through? disability is not only accessing a place nearby a business or residence, but how impractical is it going to be? we cannot make it burn soma burn them to feed a meter. >> that's what we are working on now. we will have a bigger report on how this will be implemented. the first step is the state legislature to change. if we do not get there, we cannot really do anything. we will put a paper together with the best practices. most states are moving to this. it's so difficult administratively to review every disabled placard and evaluate the disability of that person. they're just saying, they are
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asking them to pay for the access. that is sort of the underlying model of the implementation. that is the policy premised. supervisor campos: i'm still not clear on the connection of expanding the blue zones in the city. that seems like a completely different conversation than the abuse. this is to come later. president chiu: what is the state of the state legislature. ? >> where we are on that right now, we put this item into the state for legislative program, which should be approved soon. the mayor's office has also agreed to assist us, in most localities have agreed to assist us. we're taking a leadership position on this. they are waiting for us to get
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everyone together and move this -- we have had preliminary conversations with state legislatures. no one has said yes, but that will be the next step. then we will be actively involved in finding partners. president chiu: what is your prognosis? take a we have not asked them formally. we have not had the approval from the board to do that, but we believe there is an initial conversation that is very interested in looking at this from l.a., oakland, all of this the rigid state legislatures. this is not just a san francisco issue. a bigger group of people are working with us on this. >>president chiu: i certainly understand if you remove the financial incentive, that takes
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away some of it. if you are doubling the number of disabled parking spots, that makes it easier for someone to have of past to find that spot for anywhere they want to go. >> we would continue to enforce them. we would not do this and stop enforcement. this would be a partner project. enforcement would continue, because we would check to make sure there is a disability, but the incentive for an individual is less. we do not think it will eliminate it completely, but certainly produced a number of fraudulent placard's out there. if philadelphia -- philadelphia saw a huge change overnight, and even if we reduce it by 50 percent signed, that is a huge progress. president chiu: on the other side, as far as what you were doing to crack down on abuse, what head way have you made?
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to go what is problematic for us is with the constrained a number resources, what they have to do is stand there and wait for the person to come back. they stand there by the car and wait. the person comes back and has to check, and the person will say i am taking my mother to the doctor. it takes like three or four hours just to tick -- check one disability placard because you have to wait for the individual to come back. it is not a very efficient way to do enforcement, because it requires -- the state law requires you to check with the individual. you were basically standing by a car waiting for the individual to return. -- if you are basically standing by a car waiting for the individual to return. and this process of enforcement is not visual and you check in
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the database. you actually have to contact the individual, touch the individual, which makes it a very burdensome process for us. that is why it is not as effective as it originally seems. >> i certainly appreciate the challenges of the agencies, and i am intrigued by the direction you are going, i just think it is almost throwing up a white flag that is incredibly difficult. >> we are just during this period and we're way before, many months before implementation or even discussion. >> what opresident chiu: probaba year or two away from anything happening at the state level, and in the meantime the abuse will continue. i know a lot of smart people have been thinking about this. this is been an ongoing problem,
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and i know this is why the civil grand jury has been focusing on it, and i am just trying to think about what we can do to a accelerate this. >> we are very eager to do this. the revenue charges are what -- are half of what we're measuring now. the revenue loss is huge for us, so we are eager to move on this as quickly as we can. supervisor campos: if i may make a couple of comments. i appreciate the fact that you are here to present them. the concern that i have with something like this, and i think it is a reoccurring concerned with committee -- many items that involve mta, the fact that has taken a long time for anything to happen. this report was the 2006-2007 report, and a lot of the things --

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